Marks & Spencer

M&S recognises both the material and climate abatement opportunities of protein diversification and the environmental concerns associated with high animal exposure. The company has taken a dual approach to carbon reduction by prioritising plant-based expansion while simultaneously pursuing strategies to reduce the carbon output of its animal-derived products. M&S clearly acknowledges the carbon mitigation potential of alternative proteins, as evidenced by the inclusion of a plant-based sales target within the company’s net-zero plan; it aims to generate £90 million in plant-based sales by 2024. The company did not publicly disclose how this sales target would translate into a potential carbon reduction figure; however, it has a high-level modelling system that internally assesses the carbon abatement potential of expanding its plant-based range. We encourage the company to disclose this figure in the future as it would add credibility to the plant-based sales target and provide investors with a clear view of the carbon reduction expected from this objective. In the last twelve months, M&S has made significant changes to its Plan A sustainability strategy. For example, it set interim targets to reduce its carbon footprint by 34% by 2025, 55% by 2030, and become net zero across all value chains by 2040. The company had its net zero commitment signed off by the Board and is in the process of developing its carbon reduction roadmap. There has also been internal team rebuilding, with new resources explicitly allocated to protein diversification. Additionally, the company is continuing to discuss alternative proteins at a Board-level, though it has not yet released a Board-endorsed protein diversification strategy. M&S conducted its first TCFD-aligned scenario analysis, which included beef as a commodity. It assessed M&S’ risk factors under both a 1.5 ̊C and 4 ̊C warming scenario to determine potential impacts by 2100. Beef was shown to have the most significant cost impact due to the high carbon emissions associated with its production; the assessment also highlighted risks such as future carbon taxes and supply chain disruption. Despite this, M&S remains committed to maintaining its reputation as a seller of excellent quality, high-animal-welfare meat and has not set a target for meat reduction. Alternatively, the company is working on developing a roadmap to reduce emissions from its meat production and has repositioned its Head of Agriculture to oversee this strategy.

M&S has comprehensive targets in place to improve the sustainability of its meat and dairy products by reducing its deforestation exposure. The company has a clear and measurable protein diversification target and considers plant-based expansion one of its net zero priorities. During the investor dialogue, M&S shared some of its innovative approaches to carbon mitigation, like internal carbon pricing, and was transparent about its current limitations. M&S set a public target to reach £90 million in plant-based sales by 2024. M&S’ sustainable sourcing strategy primarily focuses on deforestation- and conversion-free (DCF) soy production. The company already ensures that its dairy cattle are fed 100% DCF soy, and this year it has strengthened its commitment to guarantee that 100% of soy used in all M&S animal feed will be DCF certified by 2025/26. Additionally, the company practices sustainable dairy sourcing by utilising low-methane feeds and methane capture technologies. Despite this transparency around dairy sourcing, the company provided limited insight into the sustainable sourcing initiatives and targets for its meat products. The company has commissioned Scotland’s Rural College to quantify the emissions footprint of M&S beef, allowing the company to identify precise carbon reduction opportunities; in time, it plans to take a similar approach for dairy. Unfortunately, M&S could not yet provide insight on potential mitigation actions from this initiative. During the dialogue with investors, M&S shared a novel emissions reduction strategy that would focus on internal targets via a carbon budgeting process. Each category would be allocated a carbon budget, and over time, an emissions reduction target would be applied, highlighting carbon hotspots and allowing for targeted emissions reduction. This would be an advanced carbon mitigation tool and could lead to significant Scope 3 reductions, particularly when applied to the meat and dairy categories. The company's Scope 3 ambitions are outlined in its Plan A carbon roadmap and include targets to reduce its carbon footprint by 34% by 2025, 55% by 2030, and become net zero across all value chains by 2040. M&S is still developing a comprehensive Scope 3 emissions measuring system; however, the company is collaborating with a third-party organisation called Mondra to pilot a hyper-modelling program that provides granular insight into Scope 3 emissions. The technology is still in development but would allow the company to assess the carbon output of individual ingredients enabling easier product reformulation.

M&S is continuing to expand its Plant Kitchen range mainly in its ready-meal and seasonal options and is in line with its sales target. The company is committed to growing its plant-based category but acknowledges that there are many areas for improvement within the Plant Kitchen line, mainly taste, texture, and nutritional content. The company shared that the plant-based range initially targeted a meat-eating audience and consequently contained many highly processed meat analogues. Moving forward, M&S hopes to improve its plant-based products' sustainability, health, attractiveness, price point, and taste to encourage consumers to choose plant-based options over traditional meat offerings. Due to British health regulations, M&S’ product reformulation of animal-based items is mainly centred around fat, sugar, and salt (HFSS) reduction. The company acknowledged that decreasing animal-derived ingredients is not a current priority. Still, ingredient levels in processed foods will be M&S’ next reformulation area, allowing for animal-based ingredient replacement in ready-meals. The company is using what it has learned from HFSS reformulation to guide its future reformulation strategies. M&S is continuing to partner with third-party organisations and promote plant-based items to a broader audience, but it could not provide updates on the progress of some existing collaborations; specifically, its collaboration with ENOUGH to introduce alternative protein products made from the mycoprotein "Abunda" which was initially intended to be market-ready by December 2021. In March 2022, M&S and Costa Coffee launched a partnership to offer M&S products at Costa locations, including Plant Kitchen items. The partnership is performing well and has seen strong sales.

M&S acknowledges its role in influencing consumer choice and has trialled many techniques to encourage consumers to reduce their meat consumption. Ultimately, the company wants to provide both low-carbon meat products and an exciting range of alternative protein options, so consumers can choose their preferences. M&S acknowledges the importance of appealing to the flexitarian market and wants to create great-tasting plant-based products that all consumers can enjoy. The company launched a health-focused consumer campaign, the “Sparking Change National Challenge”, which encouraged customers to increase their plant-based protein consumption and provided a range of resources designed to help participants eat healthier and reduce food waste. Three months after the challenge, 90% of participants reported eating less meat and wasting less food, and 34% were more likely to buy plant-based meat alternatives. M&S participates in plant-based campaigns such as Veganuary and Meat-free Monday to promote plant-based diets. Recently, the company’s Eat Well line became a sponsor for the national football teams. This will be an opportunity for the company to promote its healthy plant-based products as part of nutritionally balanced meals, particularly to children. Despite participating in a range of alternative protein consumer engagement strategies, M&S does not disclose how it tracks the success of individual initiatives. Moreover, the company’s engagement strategy is not linked to a protein diversification target that extends beyond increasing sales. M&S’ plant-based marketing approach is not necessarily about promoting its items’ planetary benefits; the company’s strategy is more taste-centred and aims to make products that appeal to all consumers regardless of dietary preference. Additionally, M&S recognises that meat is a divisive topic and does not want to risk alienating one of its largest consumer groups. The company does not disclose consumer engagement metrics such as marketing spending for Plant Kitchen but shared that it is conducting consumer research on various sustainability topics to assess consumer concerns and their perceptions of M&S initiatives.

M&S did not publicly report on the sales of its plant-based brand Plant Kitchen for 2021/22, prohibiting investors from tracking progress against its new target to achieve £90 million by 2024. FAIRR inferred the baseline of the plant-based sales target to be £45 million in 2020/21, yet the company did not clarify this in its reporting. The company has committed to the WWF’s COP 26 initiative to be approximately 50/50 plant-protein vs animal-protein by 2030 but finds it challenging to measure its products against the WWF guidelines. Many M&S products contain both meat and plant-based ingredients to appeal to flexitarian customers. M&S feels that the WWF’s strict plant-based categorisation does not acknowledge the progress the company has made to reduce animal content in some of its composite products; M&S hopes to work with WWF to revise the guidelines and find more appropriate metrics. M&S disclosed Scope 3 emissions for the first time in its annual report; however, it did not share its most recent emissions. Instead, the company reported its 2016/17 Scope 3 emissions (5.5 million tonnes of CO2e) under the caveat that this figure will be used as a baseline comparison for the company’s future Scope 3 targets. The company reports that 97% of its carbon footprint comes from Scope 3 emissions with its Category 1 emissions being roughly split 50:50 between Food and Clothing & Home. The company has modelled that about 1.06 mtco2e comes from animal agriculture, including meat & dairy, as well as fish. This figure represents between 20-30% of Category 1 emissions; however, it is likely to be somewhat higher due to animal-derived ingredients in ready meals and sandwiches. The company confirmed that moving forward, it will report its Scope 3 emissions annually and provide a categorical breakdown, including sourcing and manufacturing. M&S was transparent about its challenges in accurately measuring its Scope 3 emissions with the rigour expected by reporting agencies such as CDP. As a result, there are inconsistencies between the CDP report and the company’s annual report Scope 3 figures. M&S is trying to build a more systematic way to update its reporting numbers at a frequency that makes sense for the company, but these figures will still be modelled and high-level. The company is looking for an automated AI solution for the future; M&S has reached out to Microsoft, Salesforce and others to ask for new emission measuring technologies.

The company did not attend the technical roundtable on protein diversification metrics. M&S participated in a dialogue with investors and met with the coalition as it did last year. The company provided detailed answers to investor questions, was transparent about its challenges and was receptive to feedback from investors. It also showed a willingness to learn from best practices and hired managers to oversee its climate strategy which includes portfolio diversification. The company reviewed the assessment and provided feedback.